Monday, August 8, 2011

What turns off Gen X and Gen Y on life insurance

Lynn Kan

2 August 2011
Business Times Singapore
(c) 2011 Singapore Press Holdings Limited

THREE in four of Singapore's Gen X and Gen Y are happy to pay at or above market price for a life insurance plan.

Yet only 19 per cent would actually consider taking out life insurance in the next 12 months, according
to Swiss Re's survey of 1,000 Singaporeans aged 20 to 40 years.

The gap between perceived costliness and actual price is probably why Singaporeans in this age
bracket are put off buying life insurance, says Sharon Ooi, Swiss Re's director of client markets in
South East Asia, Hong Kong and Taiwan.

Swiss Re asked respondents to come up with a value of how much life insurance should be worth.

'Their value of insurance is actually within the correct range, but they don't know that,' said Ms Ooi. 'If
you narrow the gap in perception, you would get more people buying the products.'

The most common reasons for scrimping on life insurance are not having enough spare money set
aside for it or the perceived costliness of the product.

Swiss Re conducted a region-wide survey of 13,800 respondents across 11 Asia-Pacific countries, after
a similar survey in 2009 with seven countries in the data pool.

Across the board, Asia- Pacific countries' risk appetites have shrunk since 2009.

That is to be expected given what has happened since then. 'We've seen more natural disasters like
what has happened in New Zealand and Japan. There is more understanding about the exposures
people face,' said Ms Ooi. 'There is also the continued financial crisis in Europe and the US, so that
would add to the fact that they would want to take less risk overall.'

Overall, Singapore has the highest insurance ownership rate at 96 per cent.

Still, fewer than half of the respondents believed what they had taken out would be a good enough
buffer to cover their medical or health expenses.

'There is a legitimate understanding that there is a rising medical cost issue because they've seen it
happen in other countries. They need to see what they need to do to plan for it,' said Ms Ooi.

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